Question 9

An investor has a 2-stock portfolio with $150,000 invested in Herbert Manufacturing and $50,000 in Biggers Corporation. Herberts beta is 1.20 and Biggers beta is 0.90. The risk-free rate is 3.0%, and the expected return on the market is 7.0%. The expected return of the portfolio is:

		a. 7.5%
		b. 7.32%
		c. 7.8%
		d. 8.2%
		e. 8.5%
		f. 9.6%